Community Research and Development Information Service - CORDIS

H2020

INCAS Report Summary

Project ID: 645763
Funded under: H2020-EU.1.3.3.

Periodic Reporting for period 1 - INCAS (Understanding institutional change in Asia: a comparative perspective with Europe)

Reporting period: 2015-06-01 to 2017-05-31

Summary of the context and overall objectives of the project

In short, the issue addressed in this project is as follows: what can Europe learn from the Asian experiences of institutional change? What follows aims at explaining in details this question.
As Europe seeks to face its contemporary economic challenges, a strong case exists for learning from the experiences of Asian countries and Japan, in particular. The countries of Asia have distinct institutional arrangements that defy simple classification vis-à-vis the economic models of the Anglo, Nordic, Continental or Mediterranean models of Europe. Whereas Japan is often portrayed as being “behind” the tide of economic liberalization, its experience is in many ways “ahead” of Europe in other respects such as coping with technological change, slowed macroeconomic growth and demographic transitions. The notable parallels and differences between countries of the European Union and Asia provide a fascinating laboratory to develop and test institutional theories, and to draw important lessons for public policy in both regions.
Why is it important for society?
To us, there are two levels/reasons why this project is important for society.
First, in very general terms, the issue of institutional change and corporate heterogeneity is a key issue for Europe. In a context characterized by the importance of globalization and rapid technological change, major efforts have been done in Europe in order to introduce key reforms, which converge towards the aim of liberalization. The least that can be said is that it has not always generated the expected outcomes. To us, the core issue is related to the increasing corporate heterogeneity. Under some circumstances, it has been an impediment to better macro performance and we hope that our research may help to break this vicious circle.
Second, in the context of the knowledge economy, it is essential to enhance research- and innovation-related human resources, skills, and working conditions to realize the potential of individuals and to provide new career perspectives. From this perspective, our consortium brings together the high quality academic expertise, the range of academic competencies and the management experience necessary to deliver the objectives of the INCAS project.
What are the overall objectives?
First, from a theoretical perspective, this project aims to extend the perspectives of historical institutionalism and comparative capitalism by focusing on the organizational dynamics of institutional stability and change.
Second, from a more practical and concrete perspective, the objective of the project is to develop new and lasting research collaborations, to achieve transfer of knowledge between research institutions and to improve research and innovation potential at the European and global levels. Beyond the INCAS research and training project, the coordinator and his partners intend to promote scholarly cooperation between EU and Japan, in the fields of “corporate finance and governance” and political economy of institutional change.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

"For the sake of simplicity, we review here the work performed work package, although the reality is that work packages have made progress in interaction with each other.

WP 2: Towards a new conceptual framework to understand institutional change (FUB)
We have started to develop a theoretical framework by mapping concepts, synthesizing existing approaches, and developing hypotheses regarding organizational responses to institutional change. These concepts fall into two groups. Drawing on economics, we have applied the concept of complementarity for understanding performance outcomes. From organizational theory and business research, we have drawn on action-oriented concepts to understand the processes of change related to diffusion, adaptation, and institutional work. This has been done in the Discussion Paper 2016 #04 and it has been already used by other members of the team.
Also, at a more applied level, INCAS members involved in this WP have proposed renewed conceptualisation of financialisation and of corporate social responsibility (Discussion Papers 2016#04, 2017 #04 and 2017 #02).

WP 3: Building a database of corporate characteristics in Asia (Waseda University)
We have started to build a database that include information on financial systems (their size, characteristics, etc.) and on firms in Asia (Japan, Korea, Taiwan, China). It allows us to examine the diversity of organizational characteristics and how they change over time (WP3) and it has been already used in three of the discussion papers we have published: Discussion Papers 2016 #03, 2016 #05 and 2017 #03.

WP 4: Understanding the impact of liberalization and financialization on Asian firms (Oxford) & WP 5: A comparison with Europe (EHESS)
Finally, we have started to undertake a historical analysis of periods of institutional change in the selected Asian and European countries, with a focus on key legal and political reforms that have an impact on the corporate sector (WP4 & WP5). So far, we have confirmed our hypothesis that periods of financial deregulation have been the major source of increasing corporate heterogeneity, as it appears in the following discussions papers: 2016 #01, 2016 #02, 2016 #06, 2017 #01."

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

We first summarize briefly the current state of the art of the question we address before describing how our project has already moved beyond. The current state of the literature can be summarized in three points:
1) Debates on the drivers and barriers to institutional change have preoccupied the last decade of scholarship.
2) The second contribution of the literature has been to try to connect institutional and organizational changes.
3) A robust stylized fact that emerges from recent studies is the increase in heterogeneity of both organizational characteristics and corporate performance.
We have already started to challenge and extend existing theories of institutional change by comparing the experiences of Japan and few other Asian countries with those of European capitalisms. To summarize, we consider that our perspective has already contributed to go beyond existing theories by giving a stronger micro-organization foundation to institutional theories of the economic, as well as contextualizing “universal” theories from business research and economics through a richer historical and political approach.

Socio-economic impact
The socio-economic impact of our project can be already seen at the level of knowledge transfer and training. European researchers that have visited already Japan have come back to their home country with not only new ideas but also a concrete agenda to implement them. In terms of education, our on-going experience of co-advising our students should lead us in the medium run to establish joint master or PhD programs.

Wider societal implications
Two years after the beginning of the project, it is difficult to properly assess the societal impact of the project. However, it is possible to say something about the societal implication of our research so far. We have confirmed the extent of increasing corporate heterogeneity in Europe and in Japan in various dimensions (employment and finance). Also, we have found that contrary to what is expected from the literature, globalization and liberalization are the two major drivers of this trend, not technological change.
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